• Current read is 42 on the fear greed index vs 60 last week.

• The Fear & Greed Index fell from 60 to 42 this week as the market takes a breather after sending to the moon. Good! It’s justified.

• Market Fearful = Potential Opportunity/Deals. (consider buy calls/sell puts/buy shares)

• Market Greedy = Potential Over Valuation. (consider buy puts/sell shares/take on less risk)

• I like to be bullish when there is extreme fear

• I like to be bearish when extreme greed.

• Opportunity is out there, just gotta find it!

• 30 year fixed mortgage rate increased to 6.48% Today, vs 6.35% last week.

• 10 year treasury bond yield increased to 4.54% Today, vs 4.43% last week

• 2 year treasury bond yield increased to 4.15% Today, vs 4.00% last week.

• Interest rates rose this week after a stronger than expected jobs report, leading investors to dial back expectations for Fed rate cuts in the near term. Overall, this is ok. We want a strong economy & rates aren’t even that high now. Relax!

• As I always say, interest rates are gravity!

• As interest rates/bond yields INCREASE, stocks become LESS attractive because bond yields go UP which makes the risk free bond look MORE attractive.

Hey All!
Hope you had a great week.
Below is this week’s newsletter.

This week was a good reminder that stocks do not go straight up forever.

The market finally had a red day, and I know a lot of people were nervous.
But the truth is, nothing is breaking right now.

The market simply went up too much, too fast, and now we are seeing a little bit of giveback. That is normal. That is healthy. And honestly, it was needed.

The Nasdaq had one of the fastest rallies we have seen in a very long time, up roughly 33% in about 2 months. When something goes up that fast, you should expect volatility. Sharp up usually means sharp down can happen too. That does not mean the whole market is falling apart. It just means the market got a little too excited and now it is coming back to earth.

That is why I have been more cautious.

It should not shock anybody that I have been VERY careful the last few weeks. It should not shock anybody that I have not been forcing a bunch of trades like many ppl were doing. And it should not shock anybody that valuations are still a little hot.
(I show all my trades/research/daily updates/stock sheet/ect.. in real time in my discord community. Link on bottom to join)

Based on what I am seeing, the S&P 500 is still roughly 5% over fair value, and the Nasdaq is still somewhere around 5% to 10% over fair value, even after the drop. So yes, the market fell. Yes, some high beta names got smoked. But no, this is not some generational buying opportunity yet.

When the market is below the earnings per share growth line, that is when you get more aggressive.

When the market is above the earnings per share growth line, you get more careful.

It really does not need to be more complicated than that.

The hard part is actually doing it in real life because people get emotional. When the market is going up, they want to chase. When the market is going down, they want to panic. That is exactly why most people do the wrong thing at the wrong time.

We saw that again with the put call ratio. When the market was cheaper during the Iran dip, people were buying puts and hedging after the drop already happened. Then when the market ripped higher and got more expensive, people started buying calls and chasing the upside.

That is what the dumb dumb investors do that will likely not beat the brainless SP500 in the long run…

So where do things overall stand with this market?
Right now, the big four still look okay overall.
- Economy = ok
- EPS growth = great
- Interest rates = ok
- Valuations = a little expensive

So on balance, we just look ok overall with slightly higher valuations that are partially justified by higher than normal growth.

The economy looks fine. The jobs report came in strong. The unemployment rate is still low. Wage growth is still positive. Continued jobless claims do not look abnormal. This is not recession data right now.

The market tried to spin the strong jobs report as bad news because it means the Fed might keep rates higher for longer. I think that reaction is overblown. I would much rather have a strong economy with slightly higher interest rates than a weak economy with lower interest rates.

People who are begging for weak data just so the Fed can cut are basically asking for a recession with lower rates. That is not what we want.

Inflation also does not look out of control right now. The data I am watching shows inflation is getting closer to where the Fed wants it. So the idea that we are about to see a bunch of rate hikes does not make much sense to me. Maybe I am wrong, but I do not think hikes are the base case.

The bigger issue is valuations.

The S&P 500 forward P/E is around 21. The 5 year average is around 20, and the 10 year average is around 19. So the market is a little expensive, but not insane.

The reason it is getting some justification is earnings growth.

For Q2 2026, FactSet is estimating S&P 500 YoY earnings growth around 21.7%. That is very strong. The long term average is closer to 10%, so earnings growth is running more than double the normal rate.

That is why I do not think this market is a giant bubble.
If earnings keep growing, the market can grow into this valuation.

But if earnings slow down while valuations are already elevated, that is where things can get ugly fast.

IMPORTANT ANALOGY HERE:
The stock market is like a river. The big four are the direction of the water. The individual stock you buy is the boat.

When the river is flowing with you and your boat is strong, you can make a lot of money fast. That is what happened over the last couple months. Valuations went from cheap to expensive, earnings were strong, and high beta names ripped.

But now the river is not helping as much. Valuations are a little hot. The current is pushing against you a little bit. So if your boat sputters even slightly, you can move backwards fast.

That is where we are right now.
Not a disaster.
Not a screaming buy.
Just a little more difficult than it was when the market was cheaper.

The most important message this week is simple.
Do not get emotional.
Do not chase green candles.
Do not panic on red candles.
Do not force trades because you are bored.
Do not overtrade because you want action.
Do not forget about valuations.

The market going up can mess with your emotions just as much as the market going down. People think fear is the only dangerous emotion, but greed is just as dangerous. The market was on the greed side for the last couple months. Now we are starting to see a little fear come back in.

That pendulum will swing back and forth forever.

Our job is not to predict every swing perfectly. Our job is to keep ratios in check, buy good things for less than what they are worth, use options in a way that actually makes sense, and be ready when real opportunities show up.

Volatility is not the enemy.
Volatility is opportunity.

The only time volatility destroys you is when your portfolio is built wrong, you don’t know what you own & the why behind it, your ratios are out of check, or your emotions are controlling your decisions.

The market will be volatile forever.
We will see pullbacks.
We will see crashes.
We will see bad headlines.
We will see people panic.

And through all of that, the long term game stays the same.

Time in the market beats timing the market.
Buy good businesses.
Do not overpay.
Use options as a tool, not to gamble
Keep your ratios in check.

And most importantly, keep your pants on!!!!

That’s my thoughts for this week!
See you next week!

-Brandon

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Economic/Earnings Calendar For June 8 - 12:
(all times in pst)

Monday June 8:
None Scheduled

Tuesday June 9:
5:30a US Trade Balance
7a Existing Homes Sales

Wednesday June 10:
5:30a CPI Inflation Data
Oracle Earnings (post market)

Thursday June 11:
5:30a Initial/continued jobless claims
5:30a PPI Inflation Data
Adobe Earnings (post market)
Lennar Earnings (post market)

Friday June 12:
7:00a Consumer sentiment

Everything will be broken down in real time in Discord!